An umbrella company supplying labour to Balfour Beatty Vinci is reported to have submitted inflated invoices, claiming that workers were subject to PAYE tax and NIC deductions, while in reality, they were engaged and paid as self-employed. This has echoes of the Ducas case which emerged several months ago, in which the NHS may have been overcharged by £171m for workers.
To be clear: there is no suggestion of fraud by HS2 Ltd or Balfour Beatty Vinci themselves. However, the situation underlines a critical point: end users of labour supply should appreciate the need to undertake appropriate due diligence to protect themselves from both commercial and reputational risks.
Supply chains are often long and complex, making it easy for non-compliance to go unnoticed unless robust controls are in place. Clients must take proactive steps to scrutinise their labour supply arrangements and not assume that compliance is solely the responsibility of agencies or intermediaries.
HMRC continues with its publicity drive to root out fraudulent umbrella companies through new guidance to workers and radio campaigns. It’s outlined the warning signs to look for and actions to take if companies believe their pay arrangements are fraudulent.
If you are outsourcing labour, it is essential to have a clear, risk-managed process in place to vet your supply chain.
Dains supports many organisations in managing this risk and can provide practical, commercially focused advice to ensure compliance and protect your reputation.
Please get in touch if you would like to review your labour supply arrangements or better understand the risks facing end users.